In a direct challenge to MTV, five music industry giants today will announce the U.S. debut of a 24-hour videomusic channel. Sources say the new venture, which has been rumored since earlier this month, will be the springboard to a worldwide network of similar ventures (Daily Variety, Jan. 21).
The presence of Ticketmaster as one of the partners in the channel indicates that home shopping will be a major component of the service. The announcement is expected to be made at a press conference in New York.
Polygram Holding Inc., EMI Music, Sony Software, Warner Music Group and Ticketmaster will offer the channel as a basic cable service in the U.S. and Puer-to Rico, with launch expected as early as the fourth quarter of this year. The channel will seek additional partners, including cable television operators.
Initial penetration in the U.S. is expected to be through Time Warner-owned cable systems.
The new vidchannel, the name of which was not available, is likely to mirror the offerings of Germany’s Viva, a videomusic channel launched in December by EMI, Polygram, Warner Music and Sony in partnership with Hamburg radio executive Frank Otto. That German-language channel has penetrated some 90% of Germany’s estimated 13 million cable-wired homes, but critical reception has been mixed.
It’s seen, however, as a testing ground for some of the ideas that will be used in the U.S. venture.
Although the partners in the new channel will continue to license their musicvideos to MTV and other services, and will accept product from all sources, it is likely that a window of exclusivity similar to that enjoyed by MTV will be employed on certain superstar videos.
However, the partners will have to tread lightly in this area for fear of arousing federal regulators concerned with possible anti-competitive practices. The new vidchannel’s partners control four of the six big distributors that sell more than 90% of U.S. music.
The addition of Ticketmaster to the U.S. partnership is a sign that concert tickets for those artists will be a key merchandising strategy. Ticketmaster has exclusive contracts with most of the large U.S. stadiums, arenas and theaters.
Reached late Friday, MTV downplayed the impact of the new vidchannel. “We welcome fair competition,” said an MTV rep, declining further comment.
However, a cable industry source said MTV would closely watch the new entity for signs of unfair competition. In Europe, MTV is one of several parties that have complained about anti-competitive licensing of videos by record company collectives. The European Economic Commission is expected to rule soon on the licensing practices, which may serve to flag U.S. Justice Dept. interest if similar practices develop here.
MTV chairman/CEO Tom Freston has recently met with U.S. record labels to determine their plans on the new vidchannels. The vidchannel has at times had a mixed relationship with the labels, gaining credit for breaking new artists but sometimes accused of heavy-handed treatment when it rejects videos.
Last week, MTV Networks announced plans to test a home-shopping concept on MTV, VH-1 and Nick at Nite for several hours nightly beginning in April (Daily Variety, Jan. 26). The test would be expanded to a full home shopping channel if successful. How those plans will be affected by a possible lack of available tickets and merchandise from the new vidchannel partners remains to be seen.